Vinapco cash-strapped as carriers fail to settle fuel deals

HCMC - The local jet fuel supplier Vietnam Air Petrol Company (Vinapco) on Tuesday cried for help, saying that it is meeting serious financial difficulties caused by the surging debts of two local air carriers.

HCMC - The local jet fuel supplier Vietnam Air Petrol Company (Vinapco) on Tuesday cried for help, saying that it is meeting serious financial difficulties caused by the surging debts of two local air carriers.

The two carriers Jetstar Pacific Airlines Joint Stock Aviation Company and Vietnam’s private carrier Indochina Airlines are owing the jet fuel supplier a combined debt of VND210 billion, or approximately 50% of registered capital of Vinapco.

“The debts amount to approximately 50% of registered capital of our company. If this situation continues, Vinapco will face credit restrictions by banks, causing Vinapco unable to execute its business plan,” Tran Huu Phuc, director of Vinapco, told local media at a news conference in Hanoi.

In details, Indochina Airlines, which has stopped its operation, still had not paid a bad debt of VND27 billion of jet fuel bills. Vinapco has filed a lawsuit at the Hanoi People’s Court, but no result has been made for six months.

In addition, Jetstar Pacific also owes Vinapco VND180 billion of jet fuel, excluding interest rate for late payment. The debt is due to Jetstar failing to fulfill its payment on schedule to Vinapco for several months, Tran Huu Phuc told the Daily in a recent interview via phone.

Now Jetstar Pacific is paying VND3.6 billion for each of its flight day after the contract between the carrier and Vinapco has expired. Meanwhile, the jet fuel provider is waiting for a reply from the joint-stock carrier about Vinapco’s request for guarantees for Jetstar’s debt.

Phuc said at the news conference on Tuesday that it is not the first time Vinapco faced the slowness in paying debts from its customers who are local carriers. However, due to its current financial difficulties, Vinapco had to demand payment guarantee from Jetstar Pacific for the debt before signing a long-term fuel supplying contract with the carrier.

A representative from Jetstar Pacific on Tuesday confirmed with the Daily that the company was expected to mobilize about US$55 million via issuing more shares by the end of this year, but it is unknown whether part if the mobilized funds would be used to settle the overdue fuel bills.

“It’s not the first time we have met some difficulties, causing slowness in paying fuel debt to Vinapco. But, we will finally fulfill our payment,” the source said, adding “we’re among big and long-term customers of the jet fuel provider.”